Japan Household Spending:

Article Source: 

 https://mainichi.jp/english/articles/20221206/p2g/00m/0bu/019000c

Article:

TOKYO (Kyodo) -- Japan's household spending in October increased a real 1.2 percent from a year earlier, rising for the fifth consecutive month, as people spent more on trips after the government lifted coronavirus restrictions and introduced a subsidy program to revive domestic tourism, government data showed Tuesday.

Average spending by households of two or more people stood at 298,006 yen ($2,100), the Ministry of Internal Affairs and Communications said. On a seasonally adjusted basis, spending rose a real 1.1 percent.

But real wages in October fell 2.6 percent from a year earlier, declining for the seventh consecutive month and threatening to dent consumption amid higher commodity prices and a weak yen, separate data showed.

Ideas:

There are always positives and negatives in an economy. For example spending might have increased but at the same time real wages decreased most likely from inflation or the value of wages decreased as inflation reduced the value of wages and or decreased extra or disposable income.

As more and more people get out and about and get back to doing normal things, there might eventually be some constraint overall as inflation might begin to constrain some from spending as usual.

But at the same time maybe people are tired of not doing what they want to they are traveling and shopping as much as possible despite inflation concerns.

Article:

Japan's core consumer inflation in October surged 3.6 percent from a year earlier, the fastest pace in about four decades.

The data came after the country's largest labor union decided last week to call for a pay hike of around 5 percent at annual wage negotiations next spring, the highest demand in 28 years.

Wage growth is important for the Bank of Japan to attain its 2 percent inflation target in a stable and sustainable manner.

Ideas:

Japan's core inflation might have surged 3.6 percent but its still relatively lower to what South Korea and the US are experiencing.

But at the same time we don't compare one country to another as inflation might affect countries differently.

The labor union of course is going to try and get the largest pay hike possible, but its not likely companies are going to agree to that much, as they have inflation concerns to deal with too.

Wage growth still might be the most important variable for economic growth in Japan and the Bank of Japan needs sustainable wage growth to reach is 2 percent goal.

Article:

Outlays on entertainment, hotel stays and package tours grew 8.0 percent, rising for the seventh straight month, following the launch of the subsidy program in October.

Spending on transportation and communication, including for train fares, increased 1.5 percent, while that on food products dipped 0.4 percent, marking the first decline in three months in a sign that more people dined out, the ministry said.

Ideas:

The services industry was hit hard in Japan during the pandemic and is logical that its not beginning to get back to some kind of normalcy.

The real question might also be can the services industry meet demand and are they able to hire back on the people that quit or hire new people quick enough to meet increased demand.

For example, the airline industry might be seeing increased demand but are they able to meet staffing needs to meet the increased demand in travel and the same with hotels and restaurants.

Article:

Spending on clothing and footwear increased 14.9 percent due to colder weather, it said.

Household spending is a key indicator of private consumption, which accounts for more than half of the country's gross domestic product.

Ideas:

Clothing and footwear spending of course is seasonal and a 14.9 percent might be nothing more than a colder that usual winter in Japan.

Household spending and or consumer spending is always the weak link in the Japanese economy as its never reaches it potential due to many factors such as Japanese tend to spend less that those in the US, along with the ageing population challenge, and the fact that wages haven't increased much in recent years or even decades.

For the Japanese economy to grow with more overall consumer spending there needs to be real sustainable wage growth.

But that is not going to happen unless companies step forward with real wage increases. 

Have a nice day and be safe